5 questions you must ask your financial advisor

Check with your financial advisor on the risks associated with the investments recommended. Make sure the financial plan is in alignment with your risk appetite. Your risk appetite is determined on the basis of your income, age, financial liabilities, investment tenure etc

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While there is no dearth of financial advisors in the market, you must choose someone who has the competency to plan your finances really well. This doesn’t necessarily mean you go by one’s degrees or qualifications. In order to attain good financial health, you need effective planning. This is where a financial advisor can help you out. So you must find answers to specific concerns at the beginning itself to assess how helpful he/she can be.

Are the financial goals realistic?

A financial goal is considered realistic when it can be achieved within the desired period, without compromising on any other financial requirements and goals. Check with your financial advisor on how achievable your goals are within the timeline you have in mind. Your advisor’s response may or may not coincide with your thought process but consider it as a second advice.

Which are the suitable investment options?

Understand the rationale behind the recommendations made by your financial advisor. Is he/she just trying to sell a product or making an attempt to get an insight of your income and expense, and suggest investment options that suit your requirements.

Your choice of investment options would be based on your income, risk appetite and financial goals etc. For example, a person who wants to buy a home after 10 years would put his money in long-term investment assets. He has more time in his hands and a relatively higher risk appetite compared to someone who wants to buy a house after 10 or 11 months.

How often will he/she be reviewing the financial plan?

Reviewing your portfolio from time to time is essential to financial planning. Investment decisions taken at a point may not be relevant with changing time, and changing requirements and income potential. While you may not have the time to keep an eye on your investments all the time, you must ensure your financial advisor reviews your portfolio frequently.

Reviewing the financial plan at regular intervals and rebalancing it whenever required can help you to achieve your financial goals at the right time without any hassle.

What are the associated risks?

Check with your advisor on the risks associated with the investments recommended. Make sure the financial plan is in alignment with your risk appetite. Your risk appetite is determined on the basis of your income, age, financial liabilities, investment tenure etc. So, it is essential for your advisor to identify your risk appetite before planning out your portfolio. This also requires you to talk about your financial condition in detail.

What should be my financial priorities?

There’s no limit to hopes and aspirations. However, not everything can be attained at one go given there are limited means. The critical ones need to be identified and set on priority. A financial advisor should be able to categorise your goals in terms of priority and help you achieve them in the set order without compromising other goals.

Apart from these concerns, ask your advisor about the charges involved; whether there’s a direct fee or a commission. Make sure there’s no hidden cost and you are well aware of how your advisor makes money from the transaction to ensure transparency.